I have never witnessed an economic policy initiative positioned, framed and delivered with this much success. A few points must be noted for emphasis.
♦ First, at 3:30pm today President Trump will announce the final end-policy on his Steel and Aluminum tariffs. It is going to happen; and the final outline will be extraordinarily effective – in part because the opposition to the policy walked directly into the hands of a deal-maker who knows how to position the opponent’s demands to increase his own strength.
After President Trump’s lead trade policy advocate, Peter Navarro, stated yesterday the steel and aluminum tariff announcement would be coming today, the opposition immediately increased their calls for modifications.
While the White House trade lawyers were working through the day and night constructing the legalese, Fox News Ed Henry stated late last night there might be a delay….
But the media again displayed how they don’t understand this President.
When Trump establishes a goal that is a top priority for his personal MAGAnomic agenda – he will not accept roadblocks. As such, today the announcement is proceeding according to the timeline set by Trump, no-one else.
This trade specific issue, and many more soon to follow, are important to this president. This is President Trump’s subject area of specific expertise. These trade policies are the issues he has been discussing for over thirty years.
♦ Secondly, the target of the tariffs is China. The specific target has always been China; and POTUS Trump, Commerce Secretary Wilbur Ross, USTR Robert Lighthizer and Trade Policy Adviser Peter Navarro know to hit their target they have to get past the hurdle of trans-shipments of Steel to proxy nations by China to avoid the tariff.
So what does POTUS Trump do…. he takes the position of the tariff opponents and amplifies it. Trump’s trade policy opponents, realizing something was going to happen regardless of their opposition, started demanding “targeted tariffs”; that is, tariffs applied against target nations. POTUS Trump brilliantly spins their position and says: ok, let’s target by granting “exceptions” to the tariffs.
What POTUS will announce is “targeted exemptions” to the trade tariffs on Steel and Aluminum. Not “targeted tariffs”, but rather “targeted exemptions”.
The exemption approach puts more power in the hands of Team ‘America-First’ than targeting the steel dumpers directly. Team Trump will reward good behavior.
Any nation that acts like a Chinese proxy in the trans-shipment problem will not get relief from the tariffs. However, the nations that manufacture and trade honestly will be granted tariff relief. This allows Team Trump to evaluate the origin of the Steel used by countries that want to import their finished goods into the U.S. If they are using Chinese Steel, the tariff applies. If they are using their own manufactured steel, there is no tariff.
See how brilliantly that works?
By taking the position of his opposition and modifying it to enhance his own policy, POTUS has gained leverage. The U.S.A. now holds the strength of enforcement based on American determination of origin of their material. If the producing nation doesn’t follow the Trump rules, they will pay the tariff. In essence, Trump is helping all manufacturing nations by positioning the United States as the “steel compliance office”. We will determine who is using Chinese Steel and who is not.
This also gives Trump, Ross and Lighthizer massive leverage against China. No country will want to lose access to the U.S. market by engaging in the sketchy trans-shipping arrangement with China. POTUS Trump holds all the cards.
This approach also puts Mexico and Canada (NAFTA) on notice that if they use Chinese steel they will face a tariff despite our NAFTA agreement. Again, more leverage.
And now you understand this moment: